Lets Talk Audits.

Tax Audits:

 What is an audit? As defined by the IRS.gov: An IRS audit is a review/examination of an organization's or individual's accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate.

In other words the audit is a just a review of what was placed on your tax return, it can also be viewed as method of verification.

OK that was the politically correct answer for and audit, my opinion of the reason for an audit are:

• $          Politicians are not going to raise taxes on working citizens
• $          The government needs the money
• $          During low economic times small businesses grow at the fastest rate and don’t keep good        records thus,  it is the easiest way for the government to get more tax dollars.
• $         Just the mentioning of audits elicits compliance from guilty and non guilty tax payers.

There are some things to remember about an audit notice:

• $         Open all mail from the IRS immediately, the response time to the IRS at the least is a month (30 days) from the date the notice was sent. Not meeting IRS response deadlines could cost you thousands of dollars in fees and penalties.
• $         Always assume you are right, do not allow the IRS notice or auditor to intimidate you.  You have rights. And you are protected.
• $         You are not alone; the audit process for many is not a process to take on alone. There are many experts that may assist you.
• $         You can appeal, as long as you respond in a timely manner from corresponding with the auditor, the manager the audit of appeals or even tax court you can appeal, that is your right,

The one thing I want you to remember if nothing else grabs your attention always, always ,always open your main (especially your IRS mail) on the day you receive it and pay special attention to the response time. I have had to perform damage control for my clients because they waited too long to respond to the IRS and they and the only thing that could be done for them was an offer in compromise request and an appeal for the penalties.  I welcome your thoughts comments and questions.